General Cinema May Make Bid for Cadbury

CHESTNUT HILL, Mass. — General Cinema Corp., the U.S. theater operator that last year took a large stake in Cadbury Schweppes PLC, said Tuesday that it may seek control of the leading British candy and beverage company.

General Cinema said in a filing with the Securities and Exchange Commission that it may act alone or with partners and might acquire the controlling interest through open market purchases, a tender offer for Cadbury shares or in other, unspecified ways.

Analysts said Cadbury, whose U.S. holdings include the Canada Dry and Sunkist beverage brands, could be worth as much as $5 billion.

General Cinema said securing control of Cadbury was only one alternative that it was studying, and that it might instead seek to purchase a portion of the assets or business of Cadbury. Such a purchase might be for "cash, Cadbury shares or other consideration" and might include third parties, the company said in a statement issued from its headquarters here.

"General Cinema should no longer be considered a passive investor," it added.

Unannounced Market Sweep

General Cinema stated that it was studying various alternatives and said it intends to acquire additional Cadbury shares so its holding will rise above 25% of the outstanding stock. It also said it would seek permission from U.S. regulators to purchase 50% or more of Cadbury's shares. It said it now holds 17.7% of Cadbury, or about 105 million shares.

In the aftermath of the global collapse in stock prices, General Cinema last November entered the British stock market and bought 10% of Cadbury's shares.

The unannounced General Cinema market sweep, costing an estimated 128 million pounds (then $228 million), was greeted coolly by Cadbury's management. Cadbury said at the time that the purchases were opportunistic and that its management would turn aside any request from General Cinema in running the company.

General Cinema said in November that its purchases were exclusively for investment and did not signal the beginning of a takeover drive.

General Cinema, headed by Richard Alan Smith, is the largest independent Pepsi-Cola bottler in the United States, owns 59.9% of the Neiman-Marcus Group specialty retail chain and operates 340 movie theaters.

Industry analysts said General Cinema is probably attracted by the well-known brand names and soft drinks controlled by Cadbury Schweppes, which was formed in 1969 by a merger of two venerable British companies.

Some analysts said the takeover interest from General Cinema had been expected. "They're certainly looking to do something. This is the big time," said Emanuel Goldman of Montgomery Securities in San Francisco.

Shares of Cadbury and General Cinema both rose before the General Cinema announcement, which came after stock trading ended in New York.

Cadbury closed at 328 pence ($6.13), up 34 pence (63 cents), or more than 10%, on the London Stock Exchange. Cadbury shares in the United States, which are traded in clusters as American Depositary Receipts, closed at $60.375, up $5.50.

General Cinema shares gained $1.375 to $18.50 on the New York Stock Exchange in heavy trading.